NAVEEN KISHAN RICE MILL Vs. STATE OF UTTARAKHAND

JUDGEMENT

(1.) The only issue before this Court is whether Additional District Magistrate can exercise powers under section?14?of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or whether the statute gives this power specifically to the District Magistrate, not to be delegated to any other official.

(2.) The petitioner before this Court had taken a financial assistance from a bank, namely, the Nainital Bank Ltd., Branch Jaspur, District Udham Singh Nagar. Admittedly, the bank is defined as a "secured creditor" in terms of Sec. 2 (zd), of which there is no dispute. The financial assistance taken by the petitioner over a period of time since was not repaid and the account of the borrower was classified as Non Performing Asset (NPA), and consequently proceedings were initiated by the bank under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (from hereinafter referred to as the 'Act'). The initial notice under sub-section (2) of Sec. 13 was given by the bank to the petitioner on 18.11.2016, to which the petitioner replied on 20.02.2017 and thereafter the reply given by the petitioner in pursuance to the notice dated 18.11.2016 was considered by the bank under Sec. 13(3A) of the Act and order was passed on 04.03.2017. It is also an admitted fact that even prior to the decision taken by the bank on the representation of the petitioner, a notional possession of the property, on which secured interest was created, was taken under sub-section (4) of Sec. 13 read with sub-rule (1) of Rule 8 of the Security Interest (Enforcement) Rules, 2002 (from hereinafter referred to as the 'Rules'). Thereafter an application was moved by the bank to the District Magistrate on 5.5.2017. The petitioner, on the other hand, received a notice dated 09.10.2017 by the Additional District Magistrate (Finance and Revenue) under Sec. 14 of the Act. The petitioner immediately challenged the jurisdiction of the Additional District Magistrate (Finance and Revenue), and filed the present writ petition before this Court. During pendency of the writ petition, the Additional District Magistrate (Finance and Revenue) has passed another order dated 15.01.2018 handing over the possession of the mortgaged property to the bank, by force. Thereafter, on 13.07.2018, according to the bank, the property was also auctioned, but due to the stay order dated 19.07.2018, as of now nothing further has happened and the sale deed has not been executed in favour of the auction purchaser.

(3.) The only question, as already referred above, before this Court is as to whether the order handing over possession of the secured assets to the bank was passed in accordance with law, i.e. whether Additional District Magistrate has powers under Sec. 14 of the Act to pass such order, and if not what are the consequences?